What a run it has been for Lumens buyers and believers of an efficient global fund transfer system. It is interesting because in a span of 6 weeks or so, prices surged and broke 3 key Fibonacci extension levels. It only stopped short of closing above the 4th level last week as buyers begun backing off as shown by the secondary chart.
Momentum is fading and $0.31 is our immediate support. Other than the fading momentum, I cannot keep talking and emphasizing about the over-valuation of this token which is anyway expected given the rocket which took off after that break out above May’s highs in late November.
I will not recommend going long after that whole bear candlestick printed and closed above the BB last week but then again, if there is a close above $0.31, then we shall take it as a minor blemish in a perfect uptrend.
After all, figuring out tops is price action responsibility and once there is a trickle down, we shall see it from the chart.
More often than not strong surges like those seen on December 22 is followed by a period of consolidation and volatility damping.
In the daily chart, we can see that being replicated with the middle BB acting as a very strong support line as it has been in the last 2 months or so.
Now, following that XLM over-valuation, we shall only rely on price action for direction and specifically focus on how prices react at the middle BB. If bears get the upper hand then sellers can target $0.11, a potential 50% price drop.